This paper presents empirical material collected in the zonal capital town of kemise (population around 34,000) and three surrounding rural areas (peasant associations) in northeastern ethiopia. The study area is located in the oromiya zone of the large amhara region. The paper attempts to show how rural areas and the town of kemise are economically interdependent and demonstrates the role of migration and mobility in influencing and shaping the rural and urban economies. The town fulfils, inter alia, important administrative, marketing, service and retailing functions. The most successful rural households appear to be those that use non-farm and off-farm opportunities and assets (for example, trade opportunities and/or urban employment) to diversify income sources and thereby avoid the uncertainties of relying solely on crop production for household security. As a backdrop to the whole discussion, the issue of widespread rural landlessness in the study area is investigated.